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Peduto budget director nominee who owed back taxes withdraws from contention

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Edward S. Kiely, the Point Breeze management consultant Pittsburgh Mayor Bill Peduto hired to oversee the city budget, owes the IRS more than $83,000 in back taxes, according to federal court records. Kiely, 68, operates Kiely and Associates from his Point Breeze home.

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Friday, Feb. 21, 2014, 3:24 p.m.

Pittsburgh Mayor Bill Peduto's choice for budget director, who owes the federal government more than $83,000 in back taxes and interest, withdrew from contention for the job on Friday, citing a “politicized” nomination process.

Peduto also blamed politics for Edward Kiely's decision, saying Kiely didn't have the opportunity to receive a “fair and thorough hearing before City Council.”

“I regret that his nomination became mired in politics ...” Peduto said in a prepared statement.

The mayor was unavailable for comment, but his chief of staff, Kevin Acklin, seemed to back away from Peduto's statement on Friday evening.

“Personally, I don't believe there is any political agenda or subtext,” Acklin said.

City Council members said they were surprised to hear that politics factored into Kiely's decision.

“I had communicated to the mayor that I would not be supporting Mr. Kiely's nomination,” Councilwoman Natalia Rudiak said, adding that it was because of the tax issue. “I have a fiduciary responsibility to the city, and looking at Mr. Kiely's record, there were a lot of questions raised. To say that this was political, I think, was an unfair assessment of the situation.”

Rudiak of Carrick is a longtime ally of Peduto, who previously served on council.

Members had scheduled meetings with Kiely on Tuesday, saying their main objective was to learn why he owed the IRS $83,416 in back taxes and interest. They said he either canceled or failed to show for the meetings. Council must vote on whether to confirm the appointments of high-level administrators. Peduto nominated Kiely on Feb. 5 to be director of the city's Office of Management and Budget, a post that pays $96,410 a year.

“That was sort of my hint, when he didn't show, that he wasn't going to be the guy,” said Councilman Corey O'Connor of Swisshelm Park. “I don't know how it's politically driven. I think it would have been hard to get him through council when he owes back taxes.”

Theresa Kail-Smith of Westwood and Ricky Burgess of North Point Breeze said Kiely canceled appointments with them for Tuesday. Acklin said Kiely met with Council President Bruce Kraus, who did not return a phone call.

“I was willing to talk with him and keep an open mind,” Burgess said.

Court records show Kiely owed the IRS taxes for the years 2006 to 2011. He paid $4,291 in tax liens from the city and Pittsburgh Public Schools on Jan. 2 and $2,030 in back state income tax on Nov. 25, records show.

Acklin said Kiely disclosed the tax problems during a job interview and blamed them on a dispute with a business partner who went bankrupt. He said Kiely had a legitimate explanation for how he got into the mess.

Peduto served as Kiely's campaign manager during a failed 1991 run for city controller.

Acklin said the administration continued to support Kiely's nomination until it received the letter on Friday and had communicated that to Kiely and council. He said the administration did not pressure him to withdraw from consideration.

“At the end of the day it was (Kiely's) judgment,” Acklin said.

Acklin said he was unsure whether a majority on council would have supported Kiely's nomination.

“I honestly didn't count votes,” he said. “I talked to everybody (on council), and I think everybody expressed an interest to at least hear him out.”

Peduto said in his statement that he was confident Kiely “upheld his obligations as a taxpayer.”

In a letter to Peduto, Kiely thanked the mayor for the opportunity to join his administration but lamented that his appointment would “serve to distract from the city's business at a time it sorely needs tending.”

“Had we been afforded the opportunity to explain this legitimate business situation in a fair and open environment, free of political agendas, perhaps the outcome would have been different,” he wrote.

Council members said they were prepared to hear Kiely's side of the story.

“He could have had a fair hearing before City Council, but he's the one who resigned,” Rudiak said.

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